Is 5% @ $450k a reasonable broker commission for Dallas, TX?

I am new to commercial RE.Found property, decide to move with an offer, got recommended a broker.Guy seems to be good, knows his stuff (unlike others I've spoken with) , so no offense to him, but the 5% commission he's asking on a $500k transaction just strike me as too much.Considering he's only doing routine office work now, and me buying cash, however I slice and dice it he shouldn't spend more than 40 hours on that. And he's likely to get more later on when I decide to market.$25k for 40 hours is just...hard to accept.What am I missing, if anything?Thank you for your feedback!

Answer(s)

OK...correcting my own post.I posted the question since I only read the first few chapters of the representation agreement before leaving office.At the end of the agreemtn there is a special provision that the stated commission is to be limited to 50% of listing broker's total commission.Now that makes more sense.I know it would not have made a difference to me, it just struck me as abnormally high.Should have read the full document first.

In regards to commissions in general, my view is that you're paying for the deals that don't go through as well as your deal. I had two deals valued in the millions of dollars crater on the last day of due diligence last month where I spent combined hundreds of hours and will never see a penny. I have to be paid well on other deals to compensate for those type of deals. My overhead is also quite high and I split with the firm so it is not as simple as the broker makes so many dollars per hour on just your transaction.

The commission paid to a broker should be based on what value he can bring to your transaction(s). While this particular transaction may be "routine", by being an expert in the market he may be able to identify that you are paying too much or getting a great deal. Keep in mind that he does not get paid until you close. There are other brokers in the area that I am sure would accept a lower commission but there is that old adage "You get what you pay for."With that being said, it sounds like you purchasing a property. In most cases, the Seller has already built in the commission to the sales price and it will be paid regardless of you having a broker or not. As a Buyer, I always recommend being represented by competent broker as there is no cost to you. Talking to your broker would be your best option.

If you are the Buyer here, what does it matter? The Seller normally pays the commission out of the sale proceeds. Typically, the Seller will also have a broker and the fee is 6% and split 50/50 among the two brokers. If the Seller has no broker, it sounds like the Seller will actually save a point here.

yes you are missing the big picture....plumbers charge $100 to repair faucets and the parts only cost $1. What you are getting is the agent's time and expertise-and the seller may pay some of the fee but 6% on commercial property is normal.